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In a US presidential election marked by numerous twists and turns, Donald Trump has been elected as the 47th President of the United States. Throughout his campaign, he discussed a range of possible policies for his administration. Now, questions arise regarding how his presidency might impact the EV and battery sectors, as well as the broader energy transition.
1. EV market growth expected to continue but at a slower pace with adjustments in policy
Before receiving an endorsement from Tesla’s CEO, Elon Musk, Trump was vocal in his scepticism of EVs, even once suggesting that their proponents “should rot in hell.” However, after Musk’s support, Trump softened his position, remarking, “I’m for electric cars, I have to be because Elon endorsed me very strongly.”
Despite this, Trump is expected to alter the regulatory landscape for EVs as had been done under previous administration changes. The Environmental Protection Agency’s (EPA) 2027 emissions rules, which currently push strongly toward EV adoption, are likely to be revised. Moreover, future EPA emissions rules may be written under his administration. EV sales will continue to grow in the country as adoption is fully underway, however the pace at which this occurs will be altered. In our recent scenario analysis, a Trump victory in which the most drastic changes to relevant legislation, subsidies and incentives are all enacted quickly resulted in demand for EV batteries falling by as much as 20% by 2030 compared to our current outlook. Eyes will now be on the agenda set out by this administration in the early days.
Moreover, Trump has strongly opposed the presence of Chinese companies establishing operations in Mexico. With him possibly moving to put tariffs on Mexico based Chinese companies looking to sell in the US. Most recently BYD had announced intentions to establish a facility in Mexico, Trump responded by pledging to put a 100% tariff on any Chinese-made vehicles built in Mexico if they are intended for sale in the US.
READ: Trump announces new plans to revive the US auto industry
2. Federal support for the energy transition likely to persist, though some programs face cuts
Trump has made it clear that he opposes the Inflation Reduction Act (IRA), enacted under the Biden administration in 2022 to mobilise over USD369 billion in clean technology incentives through tax credits, grants, and loans. Trump’s strong win he has the possibility to repeal the IRA entirely.
However, bipartisan support for the IRA, particularly from Republican-led states benefiting from related investments, could make a full repeal politically challenging and economically disruptive. As a result, Trump is more likely to attempt dismantling or scaling back certain aspects of the legislation rather than a wholesale repeal.
Certain provisions within the IRA may be vulnerable to rollback. These include EV tax credits (30D), which Musk has supported cutting, stating that Tesla does not require purchasing incentives for its vehicles. The Advanced Manufacturing Tax Credit (45X) could also be targeted, potentially further restricting tax benefits for foreign entities. Trump may further aim to phase out the Technology-Neutral Tax Credits (45Y and 48E), which incentivise clean energy projects, by imposing tighter eligibility criteria to control costs.
Many OEMs, cell manufacturers had rushed to complete funding applications from the Department of Energy in the run up to the election, fearful of changes a Trump presidency may bring. While other players, notably Tesla, delayed future plant plans until after the election waiting for the certainty of a new presidency.
3. Increased tariffs and protectionist trade policies could impact EV and battery markets
Trump is expected to pursue protectionist trade policies, which would likely include increased tariffs. Sweeping tariffs are expected as well as tariffs targeted directly at Chinese goods. Lithium-ion cells already face a 25% tariff under the Biden administration for EVs, and from 2026 the 25% tariff will also apply to cells destined to the storage market. The new administration may raise this tariff further.
Considering the storage market, 92% of lithium-ion storage projects deployed this year in the US were LFP, 100% of these cells were sourced from China. By 2026 US-made LFP cells, supported by IRA Production Tax Credits, are projected to cost around USD63 per kWh in 2026. Trump’s potential tariff hikes, as high as 60% previously said in a statement, cou ld drive the cost of Chinese imports to around USD84 per kWh. This could pressure manufacturers to shift to domestic suppliers, non-LFP alternatives, or accept higher costs for Chinese imports. However, this raised the issue that the US will not likely have the domestic supply to meet the demand in the coming years, consequently, costs of batteries in projects will rise increasing the overall CAPEX.
4. Renewable energy projects likely to face hurdles
A Trump administration likely signals a US exit from the Paris Agreement, as it did in 2017. Throughout his campaign period Trump emphasised his priority of US fossil fuel production, reinforcing policies to ease regulations on fracking, drilling, and LNG exports. This strategy emphasises energy independence and maintains substantial federal support for the oil and gas sector. Offshore wind and other renewables projects may face administrative and permitting hurdles. Trump previously stated he intends to halt offshore wind energy projects “on day one” of his presidency. The coming weeks and months will tell how he will address the industry.
In summary, under a Trump Administration, the US clean technology industry is likely to maintain a growth trajectory, though the pace and priorities may shift. In the coming months, his administration’s specific actions will clarify its approach to the nation’s energy transition and clean technology landscape.
More Information
For more information about how the Trump presidency may affect markets see our research or get in touch.
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